GSK admits to fraud in the US, pays $3 bn in penalty

The US Justice Department said the resolution is the largest healthcare fraud settlement in the history of the US and the largest payment ever made by a drug company

GSK has pleaded guilty for introducing misbranded drugs Paxil and Wellbutrin into interstate commerce and failing to report safety data about Avandia to the US FDA

Bangalore: British pharmaceutical giant GlaxoSmithKline (GSK), which was facing civil and criminal liabilities in the US for unlawful promotion of certain prescription drugs and failure to report certain safety data, and for alleged false price reporting practices between 1997 and 2004, has agreed to pay $3 billion to resolve the issues. The US Justice Department announced that the resolution is the largest healthcare fraud settlement in the history of the US and the largest payment ever made by a drug company.

GSK agreed to plead guilty on three counts, including introducing misbranded drugs Paxil and Wellbutrin into interstate commerce and failing to report safety data about the drug Avandia to the US Food and Drug Administration (FDA). Under the terms of the agreement, GSK will pay a total of $1 billion, including a fine of over $956 million and forfeiture in the amount of over $43 million. The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK's US president and board of directors. GSK's guilty plea and sentence is not final until accepted by the US district court.

GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act as well as the states. The civil settlement resolves claims relating to Paxil, Wellbutrin, Avandia and other drugs, and also resolves pricing fraud allegations.

"Today's multi-billion dollar settlement is unprecedented in both size and scope. It underscores the administration's firm commitment to protecting the American people and holding accountable those who commit health care fraud," said r James M Cole, deputy attorney general, Department of Justice, US. "At every level, we are determined to stop practices that jeopardize patients' health, harm taxpayers, and violate the public trust - and this historic action is a clear warning to any company that chooses to break the law."

Reacting to the developments, Mr Andrew Witty, CEO, GSK, said, "This brings to resolution difficult, long-standing matters for GSK. Whilst these originate in a different era for the company, they cannot and will not be ignored. On behalf of GSK, I want to express our regret and reiterate that we have learned from the mistakes that were made. We are deeply committed to doing everything we can to live up to and exceed the expectations of those we work with and serve. Since I became the CEO, we have had a clear priority to ingrain a culture of putting patients first, acting transparently, respecting people inside and outside the organization and displaying integrity in everything we do."